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Medicaid Premiums & Work Requirements: A Prescription for Higher Costs and Lower Health Insurance Coverage

Anne Swerlick
November 2017

Abstract

Recent proposals to impose work and premium requirements on Medicaid beneficiaries pose a significant threat to health coverage for the most vulnerable Floridians. They would also add new costs and uncompensated care burdens for state and local governments, safety net providers and privately insured residents. Lawmakers should instead look to commonsense Medicaid policies with a track record of improving access to care.

During the 2017 state legislative session, proposed legislation would have imposed work and premium requirements as conditions of Medicaid eligibility. Although the bill did not pass, the same or similar proposals are likely to re-emerge in 2018.

Executive Summary

Decades of research and experience with other safety net programs show that these requirements, as conditions of Medicaid eligibility, run counter to the overall purpose of the program. Medicaid was created to provide low-income individuals and families access to health care services. Instead, these proposals would likely deter thousands of uninsured Floridians from initial enrollment and terminate eligibility for thousands of participants.

These requirements would also add significant new costs and uncompensated care burdens for state and local governments, safety net providers and privately-insured Floridians.

Proposed Medicaid work requirements are largely driven by false stereotypes. In fact:

  • Most Medicaid recipients who can work are already working.
  • Years of experience with the Temporary Assistance for Needy Families (TANF) program, including Florida’s program, demonstrate that Medicaid work requirements would not result in long-term stable employment for most participants or lift them out of poverty.
  • Medicaid coverage enables people to work or seek work because they can stay healthy or address health problems, which are often barriers to employment.
  • While the 2017 legislation exempted certain categories of beneficiaries from work requirements, such as people with disabilities, research shows that exemptions are costly to implement and not effective in protecting vulnerable participants.
  • Women, minorities, people with limited education and those with serious health problems particularly risk losing coverage due to work requirements.

Likewise, decades of research show that Medicaid premiums have deterred enrollment and resulted in loss of coverage.  For example:

  • In Florida, Medicaid financial eligibility is extremely restrictive; most participants are very low-income and struggle to afford minimal basic necessities.
  • Florida passed a Medicaid premium requirement in 2012, which was never implemented. One study projected that 800,000 children and their parents would have been dropped from the program because they could not afford a $10 monthly premium.
  • Premiums cause more people to cycle on and off the program. This cycling increases administrative costs and increases the average cost of care because healthier people are less likely to re-enroll after cancellation.
  • Premiums result in more uninsured families, which increases uncompensated care costs. These costs are shifted to state and local government, as well as health care providers.

Florida has made great progress reducing the number of uninsured, a steady decline from 20 percent in 2013 to 12.5 percent in 2016.  Adding premium and work requirements to Medicaid eligibility would be a step backwards, having the harshest impacts on children in low-income families and their parents.

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